"The board at Eicher Motors accorded in-principle approval for additional capacity creation at Royal Enfield. The additional capacity will primarily come from the first phase of Royal Enfield's third manufacturing facility at Vallam Vadagal in Tamil Nadu," the company said in a statement.

This will take the combined capacity of Royal Enfield to 9,00,000 motorcycles annually by 2018, it added. The company sells various popular models like Bullet, Classic, Thunderbird and Continental GT.

It, however, did not share planned investments for the expansion.

"Royal Enfield continues to have a strong demand for its products and has a very strong order book. We are on track to produce 4,50,000 motorcycles by the end of this year," Eicher Motors MD Siddhartha Lal said.

Royal Enfield is continuing to expand its retail footprint in India.

"By the end of the year, we plan to have 500 dealerships across India in a single unified retail identity," Lal said.

In the last quarter, Royal Enfield has taken some significant steps as part of its growth strategy and focused international thrust of leading and expanding the mid-sized motorcycle segment (250-750cc) globally.

Towards this, Royal Enfield announced its first direct distribution subsidiary outside India, in North America in August this year.